Running head: GLOBAL ISSUES REPORT 1

Global Issues Report:

Oil Exploration and the effects on UTEP

Carlos Fuentes

The University of Texas at El Paso

RWS-1301

Dr. Vierra

September 27, 2018

GLOBAL ISSUES REPORT 2

Abstract

Oil exploration, or as noted by the paper, a global issue that is intertwined with education.

With the connection of oil and education, the issue that upsurges is that education is not given

the highest priority and causes the educational systems to suffer.

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Oil Exploration

Oil exploration is the examination for oil deposits found in the earth’s crust. This allows

the discoverer of the oil to sell it and use the funds as they see fit. This paper focuses on how the

permanent university fund is useful and harmful to UTEP. How a similar way of allocating

money from state trust lands could improve education in other countries. There is a huge

difference when you compare the UT system’s Permeant University Fund and the educational

spending’s of Saudi Arabia.

Discussion

According to the UT system, the money PUF receives comes from land that has valuable

and sellable resources such as oil. The process that they follow can be seen in figure 2. These

state trust lands are very valuable to the educational system in Texas. Texas has one of the best

university endowments in the united states. According to Budge (pg. 74), Texas and Hawaii have

different laws and regulations on their state trust lands since they were both independent before

they were annexed into the United States. Since they were both independent states and countries

simultaneously, they set their own laws and orders into place. Their regulations on state trust

lands are different because they are way more lenient compared to the regulations of the other 48

states in the US. Texas can do a lot more and give more to education because they started the

PUF while they were gaining their independence from Mexico. All the Texas citizens wanted to

have to have less restrictions and more freedom, similar to the United States when they became

independent from the British. This independent and free state of mind subtly changes the laws

made around that time to be very lenient and free. Texas has many of those free laws and easy-

going regulations, allowing them to have the best state-wide educational funding system.
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According to the UT System chancellor James Milliken (pg. 1), in 1923, the Santa Rita

NO. 1 gave its first educational funds to the PUF. The money was then put into the PUF and is

allocated to all the UT schools and the A&M schools. The UT schools get 2/3 of the PUF money

and A&M gets 1/3. UTEP takes full advantage of funds from the Permanent University Fund to

renovate, create, and maintain the campus buildings. While this seems like a consistent good

thing, Souder and Fairfax (pg. 7) put down these thoughts by saying that state trust lands are not

always created equal. There are private and public state trust lands. In most cases, the oil revenue

is mostly private because of selfish reasons. Lucky for UTEP and all UT universities, the PUF

gives all they have to the UT system.

According to Satija and Watkins (pg. 2), the UT system allocated around $603 million in 2017 of

PUF money. However, they state that most of the money is used to pay for professors in UT

schools. Satija and Watkins do not believe that they as UT school’s students do not get affected

by the PUF funds. They feel that money is not spent to help students research and increase their

educations. On the contrary, Oscar McMahan (pg. 6) says that the PUF helped give UTEP $1.5

million for library renovations. The library renovations are proof that the PUF funds are in fact

being allocated properly and the UT system does help UT students by improving the school’s

campus to help fuel their students’ educations. New and improved buildings and equipment is

the best thing a university can have.

The PUF money allows for the lower ranked and poor UT colleges to get the funds and

be equal to other higher ranked colleges such as Harvard, Yale, and Stanford. According to

Barham (pg. 3), the UT system is the 3rd in the country of university endowments with $26.5

billion. This puts the UT system behind Harvard and Yale, but in front of Stanford. While UTEP

is still on the poorer side of universities, it would not be as good of a school if PUF money was
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not given to help them. PUF money has tremendously helped the education of the UT schools by

giving them the needed funds. However, while being given funds from the UT system, UTEP is

still treated differently than other UT schools because of the location and the time period UTEP

was added to the UT system. The UT schools and the A&M schools are mostly located in the

east or central Texas meanwhile UTEP is the only major outlier on the far west. During that time

period, going to the west edge of Texas was very difficult. McMahan (pg. 7) proclaims that

UTEP is treated like the metaphorical stepchild of the UT system. He makes this metaphor

because he believes that UT Austin is the favorite child who gets all the best things and UTEP is

just off to the side when it comes to big funding opportunities. UTEP does not receive the

luxurious fundings that UT Austin receives. PUF money gets used to give UT Austin beautiful

buildings that are well furnished and UTEP gets great, unfurnished buildings from PUF funds.

This causes an unfair difference in the educational spending which should be equal. UTIMCO

(the company in charge of allocating PUF funds) should be equally allocating the funds for all

the UT schools. The puts a decrease on the educational experience of the students who attend the

lower funded school.

According to Smilor, Gibson, and Kozmetsky (pg. 23), UTEP should be getting about 17

million at the least for new buildings, technology, and renovations. If Smilor, Gibson, and

Kozmetsky are correct, then UTEP is only getting about 86% of what they should be getting.

That is a problem for UTEP but a positive for UT Austin. While UT Austin is living large and

they have very nice buildings, UTEP struggled to get the funds to complete buildings, furnish

them completely, and keep their buildings up to date. UTEP was not given enough money to

furnish or fix the elevator in the physical science building. The PUF gave UTEP about $2 million

to build the physical science building but it was only just enough. UTEP even had to switch the
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architect half way through to save some money and it took a toll on the quality of the building

and how long it took to build it. That put the educational quality of UTEP lower for a while when

construction was still in full effect. UTEP also does not have a very pleasant looking engineering

building. The building looks like it has yet to be refurbished since it was built. This has sadly

again caused a small decrease in the education of the students who attend classes in this building

and makes it unfair.

Oil exploration and educational spending is not limited to Texas, nor the united states. Oil

and education are found all over the world. There is a major problem in Saudi Arabia when it

comes down to how much oil profit they make and how much they spend on education.

According to Ahmad Khatib (pg. 75), the oil revenue in Saudi Arabia is high compared to the

rest of the world. The Saudi Arabian government does not allocate as much money as the

University of Texas system toward educational purposes. While the amount allocated may still

seem very impressive like the UT system, the percentages do not compare. Kahtib stats that from

1975-2007, only about 9% of the oil revenue went to education. While the PUF had pulled in

about 3 billion in one year, all for education, Saudi Arabia made about 3.7 billion for education

in the years 1975 - 2007. Saudi Arabia, according to Khatib, wants to increase the percentage of

oil revenue used to fund education. On that note, if Saudi Arabia followed the allocations of the

PUF (figure 1) then they could majorly increase the quality of their schools and their education

system. It would be a big change that would help the overall wellness of the country. The sheer

amount of oil that Saudi Arabia mixed with the increase of the PUFs net trust values. It would be

one of the best educational systems.

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Conclusion

UTEP and other UT schools have positively benefited from the PUF funds. UT schools

have prospered because of the oil rich university lands. If the world equally distributed the funds

from oil to education, technology and innovation could rise. The Santa Rita No. 1 started a chain

reaction that has led to UTEP getting the sun bowl and renovating the library.
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References

Barham, J. (2018). The 100 richest universities: Their generosity and commitment to research

2018. Retrieved November, 15, 2018, from https://thebestschools.org/features/richest-universities-

endowments-generosity-research/

Budge, W. R. (1999). Changing the focus: Managing state trust lands in the twenty-first century. Journal of

Land, Resources, Environmental Law 19(2), 223-248.

Interview with Oscar H. McMahan by David Salazar, 1973, "Interview no. 97," Institute of Oral History,

University of Texas at El Paso

Khatib, A. (2011). The effect of the increase in oil revenue on government expenditures on education in

Saudi arabia.3(2), 74-76.

Raymond W. Smilor, David V. Gibson, George Kozmetsky, Creating the technopolis: High-technology

development in Austin, Texas, In Journal of Business Venturing, Volume 4, Issue 1, 1989, Pages

49-67, ISSN 0883-9026, https://doi.org/10.1016/0883-9026(89)90033-5

Satija, N., & Watkins, M. (2017). UT system oil and money is a gusher for its administration-and a trickle

for students. Retrieved 9/30, 2018, from https://www.texastribune.org/2017/08/21/ut-system-oil-

money-gusher-its-administration-and-trickle-students/

Souder, J., Fairfax, S. (1996). State trust lands. Lawrence, Kansas 66049: University Press of Kansas.

Understanding PUF: What is the permanent university fund? (2016). Retrieved 9/16, 2018, From

https://www.utsystem.edu/offices/chancellor/blog/what-is-the-permanent-university-fund
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Figure 1. PUF land funds rise as time progresses from 2015 to 2017.

Figure 2. How PUF money is collected and allocated.